Will My Medicare Insurance Change Under The Affordable Care Act?

Medicare is a form of national health insurance that currently insures over 45 million people. With the advent of the Affordable Care Act and the private exchanges due to roll out in January of 2014, lots of people on Medicare are wondering how their coverage will be affected. Let’s take a look at the most common types of insurance and if or how they will change due to the new healthcare law.

Medigap Insurance

Medigap is a type of health insurance that pays for the portion of your medical bills that Medicare doesn’t cover. For example, if you have Medicare and you have a surgery, you will pay for 20% of the cost of the surgeon’s Medicare-approved fee. Medigap plans are also commonly called Medicare supplements.

These plans have been around for over 50 years – supplementing Original Medicare A & B so that people like you don’t have to spend thousands paying your share.

Since Original Medicare itself is not changing under the new legislation, Medigap plans are not currently slated for any changes either.

There are a few bills lingering around Congress that if passed, would change the way Medigap plans work. However, none have made it out of committees yet, and until Medicare itself is overhauled, we aren’t like to see too many changes to the basic structure and workings of Medigap plans

Medicare Advantage plans

Medicare Part C, commonly called Medicare Advantage, is a program under which beneficiaries can choose to get their benefits through a private insurance company instead of from the federal government. Popular options include HMO and PPO style plans where you enroll, agree to use the plan’s network of healthcare providers, and just pay copays for your medical services.

These have been widely popular due to their extremely low cost. Some advantage plans cost you absolutely nothing at all. That’s because Medicare pays the insurance company a monthly fee to deliver your healthcare benefits.

While extremely popular, Medicare Advantage plans have the most risk of significant change in 2014. One of the ways in which Obamacare itself is funded is that $120 billion in funding will no longer be allocated for Advantage plans.

When this money is re-routed to fund the implementation of the ACA, many of the insurance carriers are likely to raise the monthly premiums they charge for their Medicare HMO and PPO plans. They may also institute higher copays that beneficiaries must pay when seeking services.

We won’t really know just how much change until sometime closer to October of 2013 when the plans roll out their new outlines and costs for next year.

Medicare Part D

Medicare drug plans are already benefitting from the new legislation. Before the ACA, seniors who had drug spending over a certain annual amount fell into a “coverage gap” where they had to pay for 100% of the cost of their medications for a time.

Although there are catastrophic coverage limits to protect people from too much drug spending, the higher costs during the gap were upsetting many people.

Fortunately the ACA has reduced this spending. In 2013 when Medicare beneficiaries reach the gap, they now only pay 47.5% of the cost of expensive brand name drugs, and they also get greater discounts on generic medications. In addition, the discounts in the gap will continue to increase until 2020, when the gap is scheduled to close altogether.

While the success of the Affordable Care Act remains to be seen, we do know that many people are already benefitting from lower drug costs. At the same time, there are a great many people who will be negatively affected if their Medicare Advantage plan suddenly gets much more expensive next year.

Despite these changes, Medicare itself also needs a major overhaul in order to keep it sustainable for the long term. Keep your eyes and ears open for further changes as Congress is very likely to address this in the months to come.